This invention relates generally to a method and system for assessing sales activity of a merchant, and more particularly to a network-based system and method for assessing the sales activity of a merchant to identify illegal or brand damaging merchant activity.
Financial transaction cards have made great gains in the United States as a means to attract financial accounts to financial institutions and, in the case of credit cards, as a medium to create small loans and generate interest income for financial institutions. Nonetheless, the financial transaction card industry is subject to certain well-known problems.
Taking the credit card industry, for example, it is well-known that at least some merchants will engage in illegal or potentially illegal activities, or activities otherwise undesirable to some of the parties involved in the transaction. Specifically, a merchant may engage in the sale of illegal pharmaceuticals, child pornography, or terrorism related products. At least some of these undesirable merchants may offer these illegal or potentially illegal products for sale over the Internet, through the mail system or via telephone orders, wherein the product is purchased using a financial transaction card such as a credit card. The other parties involved in such a credit card transaction, namely the acquirer bank, the credit card network, and the issuer bank, do not want to be involved in such illegal or potentially illegal transactions. Accordingly, at least some of these parties will work to shut down such undesirable merchants.
When the relationship between an illegal or potentially illegal merchant and an acquirer bank is terminated, they oftentimes attempt to re-establish a relationship with another acquirer bank. At that time, such undesirable merchants may send out emails to their past customers informing their past customers that they have re-opened for business. These undesirable merchants are sometimes referred to as “violator” merchants or BRAM merchants. BRAM refers to Business Risk Assessment & Migration (BRAM), which is a program used by MasterCard International Incorporated for eliminating illegal or brand damaging merchants.
In at least some known cases, customers of BRAM merchants will move their business elsewhere when the merchant's relationship with an acquirer is terminated in order to find another source for these illegal or potentially illegal products. In some cases, BRAM merchants will have multiple merchant agreements with acquirers appearing to be different merchants. In addition, certain categories of BRAM merchants will attract common card holders because of addictive behavior (e.g., pharmaceuticals and pornography) or firmly held principals (e.g., terrorism). In some cases, notification channels exist among these consumer communities relative to BRAM merchants.
It is also known that at least some BRAM merchant customers are repeat customers. BRAM merchant customers are also typically geographically diverse and are not likely to make purchases at another non-BRAM merchant.
In at least some cases, credit card networks (e.g., MasterCard®) will try to locate BRAM merchants and then work to shut them down. At least one known way of a credit card network locating BRAM merchants is to use web crawlers or by receiving phone or email solicitations. Unfortunately, these approaches are reactive and there are delays in identifying violator merchants.
Accordingly, a system and method for proactively assessing the sales activity of a merchant to determine whether that merchant is engaging in illegal or potentially illegal activities is needed. The system and method would identify potential violator merchants by utilizing credit card transaction details of known violator merchants to create a violator profile database, and then, on an on-going basis, compare customer profiles for active merchants to the violator profile database.